Q1 2020 Results The Hague, 4 May 2020
Published by: PostNL NV Prinses Beatrixlaan 23 2595 AK The Hague The Netherlands Additional information Additional information is available at www.postnl.nl. This press release contains inside information within the meaning of article 7(1) of the EU Market Abuse Regulation. Note that the numbers presented in this presentation (tables and result explanations) may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures due to rounding. Warning about forward-looking statements: Some statements in this press release are ’forward - looking statements‘. By their nature, forward -looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict, and that may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about possible future events. You are cautioned not to put undue reliance on these forward-looking statements, which only apply as of the date of this press release and are neither predictions nor guarantees of possible future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities law. Use of non-GAAP information: In presenting and discussing the PostNL Group operating results, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. Non-GAAP financial measures do not have a standardised meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The main non-GAAP key financial performance indicator is normalised EBIT. Normalised EBIT is derived from the IFRS-based performance measure operating income adjusted for the impact of project costs and incidentals. 2
Q1 2020 Results Key takeaways Business review Financial review & Outlook Q&A 3
Mail and parcel deliverers provide a vital service to society Comprehensive business continuity plan in place since early March 4
Health and safety for our people and consumers comes first Impact Covid-19 going forward • Measures taken across all businesses to ensure 1.5 metre distance expected to be maintained, including contact-free delivery and flow patterns, extra cleaning of facilities and distribution of disinfectant gels Extensive internal communications programme to promote social distancing and extra hygienic measures • • All our people with office jobs are working from home • Sick leave levels among staff started to improve in early April • Both challenges (incl. costs related to sick leave and extra measures, as well as overall macroeconomic impact on business environment) and opportunities (e-commerce picking up and increasing popularity of consumer mail) 5
Key financials and highlights Q1 2020 Solid Q1 performance and improved free cash flow Revenue Normalised EBIT Free cash flow Outlook normalised EBIT FY 2020 €701m €15m €110m - €130m €5m Q1 2020 Q12019 €684m €30m €(8)m Highlights Q1 2020 • Committed to achieve FY 2020 outlook; uncertainties regarding duration and severity of Covid-19 pandemic may impact ability to achieve this result • Strong development at Parcels since mid-March, supported by positive price/mix effect • Integration of Sandd ahead of plan in delivering anticipated benefits and synergies • More greetings cards contributing to a favourable price/mix development • Additional mail volume decline due to lower direct mail activity since mid-March • Measures to protect our people and clients and increased staff absence due to Covid-19 pandemic impacted operating costs • Normalised EBIT includes impact of higher pension expenses and new labour regulation (together €(8)m), as indicated before, a nd sale and discontinuation of non-core activities of Mail in the Netherlands • Disciplined working capital management contributed to improved free cash flow 6
Growing importance of digitalisation Q1 2019 Q1 2020 96m 114m online +18% visitors (44% via PostNL app) (55% via PostNL app) 4.5m 5.5m PostNL +22% accounts 308k 520k stamp codes +69% 340k 770k talks with +126% chatbot Daan 7
Q1 2020 Results Key takeaways Business review Financial review & Outlook Q&A 8
Parcels: strong volume development since mid-March, supported by positive price/mix effect Revenue Normalised EBIT Volume growth Revenue mix Spring Parcels Benelux €414m €26m 2.8% Q1 2020 Q1 2020 Logistics & other €414m Q1 2019 €398m €23m Revenue growth Result Parcels up €3m • Volume growth 11.1% in March • Operational efficiency improved • Covid-19 crisis resulted in pick-up in e-commerce • Better hit rate • Good growth in small and mid-sized webshops contributes to • Drop duplication slightly down favourable development of price/mix effect • Higher costs: • Run-rate growth 13.6% at end of March, with even stronger • Adjustments in process and higher staff absence related to growth in April Covid-19 • As expected, webshops opting for multi-vendorship impacted • Increased cost level due to new depots opened in 2019 overall volume growth PostNL, especially in January and February • Impact new labour regulation • Mixed growth pattern continued • Improved result at both Spring and Logistics • Low growth rates in some, more mature, e-commerce segments, e.g. fashion • Yield management (incl. improved pricing) 9
Parcels: normalised EBIT development (in € million) Normalised EBIT Q1 2019 23 Parcels Benelux 2.8% volume growth in Q1 2020 Revenue - volume 6 Yield measures supported by positive mix effects Revenue - price/mix 6 CLA increase, indexation subcontractors and impact of new labour Organic costs -5 regulation Volume-dependent costs -5 Combination of efficiency (hit rate, drop duplication) and other costs Other costs -5 (partly related to new depots that went into operation in 2019) Improving performance Spring and Logistics Other results 6 Normalised EBIT Q1 2020 26 Impact of new labour regulation New labour regulation 2 Normalised EBIT Q1 2020 28 like-for-like 10
Mail in the Netherlands: integration Sandd ahead of plan and already accretive to normalised EBIT Revenue Normalised EBIT Net contribution of Sandd Addressed mail in normalised EBIT volume decline €395m €5m €5m 12.8%* Q1 2020 Q12019 €392m €16m Revenue development Result • Volume declined by 12.8%* • Sandd Integration ahead of plan in delivering anticipated benefits and synergies • Substitution in line with expectations • Impact of elections in 2019 (1.8%) • Impact Covid-19 • Covid-19 crisis: more greetings cards, but lower direct • Cost savings initiatives progressed according to plan mail activity; additional volume decline almost 2% • Adjusting sorting and delivery process (partly phasing) • Streamlining of staff • Reduced international mail activity • Centralisation of locations • Consolidation of Sandd • Moderate price increases and favourable mix effects • Discontinuation of non-core activities 11 * Adjusted volume decline (one working day less): 12.3%; starting point for volume decline: 2019 pro forma volume including Sandd volumes
Mail in the Netherlands: normalised EBIT development (in € million) Normalised EBIT Q1 2019 16 Mail activities Volume decline 12.8%*, r evenue includes €37m related to Sandd Revenue - volume 13 consolidation Moderate pricing policy supported by favourable development Revenue - price/mix 10 price/mix effects Mainly CLA-related Organic costs -5 Including volume-dependent costs related to the addition of Volume-dependent costs -9 volumes from Sandd Cost savings and other efficiency related results, costs related to Sandd (mainly one- off integration costs of €17m), restructuring Other costs -13 charges, and other Impact of sale of PCS and Spotta, discontinuation of unaddressed Other results -7 activities) and result other services (f.e. export) Normalised EBIT Q1 2020 5 * Starting point for volume decline: 2019 pro forma volume including Sandd volumes 12
Q1 2020 Results Key takeaways Business review Financial review & Outlook Q&A 13
Generation of free cash flow in Q1 2020 €13m improvement compared to Q1 2019 Q1 2019 Q1 2020 Comment (in € million) Normalised EBIT 30 15 Reversal normalisations -8 -17 Increase mainly related to Sandd Depreciation & amortisation 48 35 Capex -10 -8 Temporary effect, mainly related to Sandd Lease payments -13 -18 Continuing the strong Q4 2019 Change in working capital 0 -6 performance and some phasing effects Mainly restructuring cash-out (Sandd) Change in pensions and provisions -1 -17 No tax payments in Q1 2020 Interest paid and income tax -45 -1 Includes €7m proceeds sale of non -core activities Other 4 9 Improvement €13m Free cash flow -8 5 14
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